Reporter Park Soo-hyun of Money Today | 2023.03.06 14:15
Liquor stocks, which soared on speculation that soju and beer prices could rise, are bearish. This is because the government is putting the brakes on the increase in the price of alcoholic beverages following the pace of public utility rate hikes. As the liquor company announced that it has no plans to raise prices for the time being, the stock price is on a downward trend.
According to the Korea Exchange on the 6th, as of the 3rd, stock prices of Hite Jinro and Lotte Chilsung, which are liquor manufacturers and distributors, fell 5.31% and 2.32%, respectively, compared to the 20th of last month. Muhak and Jeju Beer also fell 6.03% and 5.44% over the same period.
Liquor stocks, which recorded a low at the beginning of the year, soared on the 20th of last month on the observation that the factory price of alcoholic beverages such as soju and beer may increase. Compared to January 2 this year, stock prices of Hite Jinro (4.09%), Lotte Chilsung (1.35%), Jeju Beer (27.81%), and Muhak (21.46%) all rose on the 20th of last month.
The strength of mainstream stocks was short-lived. Deputy Prime Minister of Economy and Minister of Strategy and Finance Choo Kyung-ho appeared at the National Assembly on the 22nd of last month and said, “Items such as soju are items that our people enjoy very closely. all.
As the government practically put the brakes on price hikes, liquor distributors such as Hite Jinro, Orbi Beer, and Lotte Chilsung announced that they had no plan to increase prices for the time being. As a result, mainstream stocks have returned some or all of the gains at the beginning of the year in just eight trading days.
The reaction in the liquor industry is that the government’s price stabilization order is burdensome. An official from the liquor industry said, “It is not easy to raise prices because consumers are sensitive to price increases.” This is clear, but the dominant voice is that it is burdensome because the government has ordered price stabilization.”
There are opinions that the government’s price control brings confusion to the market rather than helping to stabilize prices. Seong Tae-yoon, a professor of economics at Yonsei University, said, “Telecommunications and banks have some publicity, but asking the food or liquor industry to freeze prices can be seen as excessive.” It could show up as a problem or additional price pressure.”
Independent of the government’s order, the stock market presents a bright outlook for the stock prices of liquor companies. Shim Eun-joo, a researcher at Hana Securities, said, “We expect the liquor market to grow by 3-5% this year compared to the previous year.” However, “As the selling price increase effect is effective until the first quarter of this year, in fact, production capacity growth is expected to be somewhat limited this year as well,” he said.
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